Bonita Industries uses the percentage-of-receivables basis to record bad debt expense and concludes that 4% of accounts receivable will become uncollectible. Accounts receivable are $384,400 at the end of the year, and the allowance for doubtful accounts has a credit balance of $2,908.(a) Prepare the adjusting journal entry to record bad debt expense for the year.(b) If the allowance for doubtful accounts had a debit balance of $954 instead of a credit balance of $2,908, prepare the adjusting journal entry for bad debt expense.(Credit account titles are automatically indented when amount is entered. Do not indent manually.) No.Account Titles and ExplanationDebitCredit(a)Enter an account titleEnter a debit amountEnter a credit amountEnter an account titleEnter a debit amountEnter a credit amount(b)Enter an account titleEnter a debit amountEnter a credit amountEnter an account titleEnter a debit amountEnter a credit amount

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Asked Nov 24, 2019
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Bonita Industries uses the percentage-of-receivables basis to record bad debt expense and concludes that 4% of accounts receivable will become uncollectible. Accounts receivable are $384,400 at the end of the year, and the allowance for doubtful accounts has a credit balance of $2,908.

(a)   Prepare the adjusting journal entry to record bad debt expense for the year.
(b)   If the allowance for doubtful accounts had a debit balance of $954 instead of a credit balance of $2,908, prepare the adjusting journal entry for bad debt expense.


(Credit account titles are automatically indented when amount is entered. Do not indent manually.)

 

No.
Account Titles and Explanation
Debit
Credit
(a)
Enter an account title
Enter a debit amount
Enter a credit amount
Enter an account title
Enter a debit amount
Enter a credit amount
(b)
Enter an account title
Enter a debit amount
Enter a credit amount
Enter an account title
Enter a debit amount
Enter a credit amount
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Expert Answer

Step 1

Bad debt expenses need to e recognised in the year of the sale of the goods based on estimated percentages by debiting bad debt expenses and crediting allowance for doubtful debts. When a balance in allowance for debt exists, the bad debt charged should be deducted by the existing balance, so that the desired allowance account reflects an adequate credit balance.

Step 2
Accounts Receivable balance
Uncollectible Accounts Receivable (4% *384400)
Balance in Allowance for doubtful accounts
Bad Debt expenses to be recognized (15376-2908)
384400
а
15376
2908
12468
Journal entry
Account Title & Explanation
Debit $
Credit $
No
Bad debt expenses
12468
а
Allowance for doubtful accounts
12468
(To account for bad debt expenses)
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Accounts Receivable balance Uncollectible Accounts Receivable (4% *384400) Balance in Allowance for doubtful accounts Bad Debt expenses to be recognized (15376-2908) 384400 а 15376 2908 12468 Journal entry Account Title & Explanation Debit $ Credit $ No Bad debt expenses 12468 а Allowance for doubtful accounts 12468 (To account for bad debt expenses)

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